WHEN IS THE BEST TIME TO INVEST OR NOT?

The stock market has ridden a roller coaster this year. The Dow Jones Industrial Average (DJIA), a stock market index comprised mostly of “blue-chip stock” companies, swung down and then up by 2,000 points between Jan. 1 and mid-April. “Stock market volatility can be unsettling and give many investors pause, especially when it involves their hard-earned money,” says Brian Haendiges, senior vice president, MassMutual Investment Services. “While many things contribute to movements in the stock market—both good news and bad, economic changes and consumer sentiment - volatility is normal. Investors need to tune out the noise from short-term market fluctuations and focus on their longer-term goals, especially when it comes to investing for retirement.” Since the Great Depression in 1929, there have been 26 bear markets, including in 2008, and 26 bull markets, according to the most recent report by seekingalpha.com. A bear market is defined as a 20 percent decline in the Dow Jones that was preceded by a 20 percent rally while a bull market is defined as a 20 percent rally that was preceded by a 20 percent decline. Financial experts like Haendiges caution investors against trying to time the market. After all, history tells us that it’s better to stay put rather than jump in and out. As Warren Buffett, legendary investor and CEO of Berkshire Hathaway has been quoted saying, “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.” Historically Mr. Buffett follows a long-term value investment strategy whereby investments are held for longer periods of time to maximize the potential for a greater return. “The lesson is clearly to stay the course,” Haendiges says. “Despite the inherent volatility in the stock market as it reacts to short-term trends, the long-term trend of the market has been upward.” As an investor, you should keep in mind that past performance is no guarantee of future results. It’s a good reason why you should review your goals, risk tolerance and time horizon with a financial advisor to determine which investments are most appropriate. If you’re concerned about volatility, you can diversify your investments across a wide variety of different asset classes to potentially reduce risk and enhance returns. Asset classes can include: stocks and bonds of companies in different industries, sizes, regions and countries, real estate, commodities and precious metals, to name a few. While diversification does not guarantee a profit or protect against loss, positive performance of some investments may be offset by the poor performance of others. So is now a good time to invest or should you avoid jumping into the markets? “There is no way to accurately predict market fluctuations as experienced money managers can disagree about where markets are headed in the short term,” Haendiges says. “Investors should consult an investment professional about what makes sense for them. One thing we have learned, though, is that when it comes to long-term investing, time in the market trumps market timing.”